American Riviera Bancorp, holding company of American Riviera Bank, has announced unaudited net income of $5.7 million ($0.98 per share) for the six months ended June 30, 2023, consistent with the $5.7 million ($1 per share) earned in the same reporting period in the previous year.

Unaudited net income was $2.7 million ($0.47 per share) for the three months ended June 30, 2023, compared to $2.6 million ($0.45 per share) earned in the same reporting period in the previous year.

“American Riviera Bank reported stable earnings, continued loan growth, and increased capital ratios despite the elevated interest rate environment,” said Jeff DeVine, president/CEO. “Our clients appreciate the bank’s relationship business model of providing friendly service to depositors and customized loans on the Central Coast of California as we have for the past 17 years.

“We experienced stable deposit levels this quarter, and the bank has paid more interest to our local depositors while maintaining profitability year-over-year.”

Second Quarter Highlights

 – The Bank has the highest “Super Premier” rating for financial performance from the Findley Reports and has maintained a “5 Star – Superior” rating from Bauer Financial as of March 31, 2023.
– The Bank was rated “Outstanding” by the Federal Deposit Insurance Corporation in 2023 for its performance under the Community Reinvestment Act.
– Return on average assets for the second quarter ended June 30, 2023, was 0.85%, and return on average equity was 11.84%.
– Total loans reached $945.4 million at June 30, 2023, an increase of $20.6 million or 2.2% from the prior quarter-end, and $84.6 million or 9.8% from June 30, 2022. The Bank’s loan-to-deposit ratio at June 30, 2023, was 87.3%.
– Non-interest-bearing demand deposits totaled $442.1 million at June 30, 2023, a decrease of $18.6 million or 4.0% from the prior quarter-end, and a decrease of $45.1 million or 9.3% from June 30, 2022. Non-interest-bearing demand deposits at June 30, 2023 represent 40.8% of total deposits, an increase from 38.8% one year ago.
– Interest-bearing deposits totaled $640.4 million at June 30, 2023, an increase of $1.4 million or 0.2% from the prior quarter-end, and a decrease of $127.7 million or 16.6% from June 30, 2022. The Federal Reserve’s actions over the last year to rapidly increase interest rates have caused a shift in interest-bearing depositor behavior as some clients have decided to reinvest their excess cash in non-FDIC insured, external investment products.
– As of July 24, 2023, total deposits have increased $16.5 million or 1.5% subsequent to the most recent June 30, 2023 quarter-end and are at approximately the same level as reported at March 31, 2023.
– During the second quarter of 2023, the Bank opened 802 new deposit accounts, compared to 784 in the last quarter, and 585 in the same quarter last year.
– All of the Bank’s deposits are local, retail deposits. At June 30, 2023, the Bank had no wholesale brokered deposits.

Second Quarter Earnings

For the second quarter of 2023, unaudited net income pre-tax, pre-provision, pre-PPP fees (a non-GAAP measure) was $3.9 million, compared to $4.1 million in the first quarter of 2023 and second quarter of 2022. For the second quarter of 2023, unaudited net income was $2.7 million, compared to $3.0 million in the first quarter of 2023, and $2.6 million in the second quarter of 2022.

The bank continues to grow interest and fees on loans sequentially over the last four quarters from $9.4 million in the second quarter of 2022 to $11.8 million in the second quarter of 2023, representing a $2.4 million or 26.2% increase. However, the cost of funding has also increased sequentially from the historically low levels that existed prior to the Federal Reserve’s aggressive rate increase policy.

Interest expense on deposits has increased approximately nine-fold from $0.2 million in the second quarter of 2022 to $2.0 million in the second quarter of 2023.

At the same time, excess cash and due from banks has moved back to a more normalized level as the Federal Reserve has tightened economic conditions, resulting in a decline in interest on cash and due from which was at elevated levels for most of 2022.

Interest on cash and due from peaked at $1.3 million for the fourth quarter of 2022, compared to a more normalized level of $0.3 million in the second quarter of 2023 and $0.5 million in the second quarter of 2022.

For the financials overview, visit https://americanriviera.bank/blog/american-riviera-bancorp-announces-results-for-the-second-quarter-of-2023.